Failure to check charterparty wording catches shipmanager out

May 10 2019

The International Transport Intermediaries Club (ITIC) has urged shipbrokers and managers to check the terms of their charterparty agreements closely before signing to avoid costly mistakes further down the line.

Illustrating the point, ITIC cited the case of the manager of a tanker, which arrived in West African waters, who believed that the terms of a charterparty provided that armed guards were to be appointed at the charterer’s expense.

The manager duly appointed the guards at a cost of $170,000. However the charterer refused to pay the invoice.

The charterparty terms did include provisions relating to the appointment of armed guards, but their deployment was not mandatory. In addition, the charterparty provided that the charterer was only liable for up to $20,000 of any costs attached.

As a result, the charterer offered to pay the $20,000, and the owner demanded that the managers pay the shortfall.

The owner pointed out that it had sent the manager voyage orders stating that the decision to appoint armed guards was one for the owner to make. It had in fact only appointed armed guards for one out of the last 10 calls to the area and on that occasion the charterparty required the charterer to pay the security bill in full.

ITIC said it has seen a number of claims caused by shipbrokers and managers acting on their recollection of a charterparty wording, as opposed to checking what the charterparty actually said.